Today I noticed that there is something inside the front camera on my iPhone 4. It does not affect the usage and the camera seems to work fine, but it is annoying that something happened and I have no idea how. I have attached two pictures showing the camera...does anyone else have this issue? Do you think Apple would replace the phone under Applecare?

Are you using a screen protector? that might have caused this visual flaw.
If it's there and the camera isn't affected in any way, I don't think it's a problem at all.
If you want to use your warrenty I would take it back to apple & ask for a replacement to get a free new iPhone ( or refurb , but that's nearly the same )

Thanks everyone for the quick replies...I do use a screen protector; however, it doesn't cover the camera at all...to me, it looks like it is either moisture buildup or cracks...can the camera crack without the screen cracking?

Unknownbeing, did it eventually do anything to the front camera? Did you figure out what caused it? Just trying to get different opinions and to see if it is really something to worry about or not.

same thing happened to an old blackberry phone i used to own. if i recall, there was a thin plastic piece that became dislodged and slid in front of the lens. its in the shape of the lens and surrounds it. if you take the phone apart, you can remove it i think.

Thanks for the replies...it is under Applecare under March of next year; however, since it doesn't actually affect the camera usage, do you think Apple would replace it? I can not tell if I cracked the glass or not, I would assume if it was a crack it wouldn't look the way it does.

Unknownbeing, what eventually happened with you iPod Touch? Did the problem go away or just stay?

I am worried that it may get worse to the point where the camera will not work at all...like I said, it is fine for now.

I've seen pictures on here that people have posted of their rear-facing camera with the same issue. Personally, I would take it back and get a new one under warranty. It's not going to "fix itself" so the only thing that can happen is that it will stay the same or it will get worse. I would rather replace it now than wait until the warranty is up for it to impact the functionality and you can't replace it.